FTC Wants Do-Not-Track for Online Ads

The Federal Trade Commission wants a Do-Not-Track program for online advertising. The stunning recommendation comes just as the online ad industry readies a broad-reaching self-regulatory initiative in response to the FTC’s own guidelines for online behavioral ad practices. The industry has been too slow to act, said the agency.

Though the commission hinted at its support for do-not-track earlier this year, the FTC officially announced it in a report published today. According to the commission’s proposed framework for protecting consumer privacy, a do not track mechanism would involve a persistent cookie-like browser setting notifying third party ad tracking and targeting firms that a consumer does not want to be tracked or receive targeted ads.

“Such a universal mechanism could be accomplished by legislation or potentially through robust, enforceable self-regulation,” stated the 122-page report. “To be effective, there must be an enforceable requirement that sites honor those choices.”

The report calls the do-not-track concept “the most practical method” of providing universal choice to consumers regarding use of their online data for ad targeting.

FTC Chairman Jon Leibowitz (pictured above) threatened more privacy cases in the coming months during a conference call this afternoon about the report, and suggested “a legislative solution will surely be needed if industry doesn’t step up to the plate.” He indicated that browser providers should move to implement do-not-track capabilities.

The report chides industry, implying its self-regulatory efforts – heavily influenced by the FTC’s call for a “notice and choice” based system – have taken too long to come to fruition. “The FTC has been calling on industry to implement innovations such as ‘just-in-time’ choice for behavioral advertising since 2008. Although there have been developments in this area…an effective mechanism has yet to be implemented on an industry-wide basis,” noted the report. It added, “industry efforts to address privacy through self regulation have been too slow, and up to now have failed to provide adequate and meaningful protection.”

In October, a coalition of ad industry organizations operating as The Digital Advertising Alliance unveiled an icon intended to be displayed on ads targeted using behavioral data, as well as other forms of targeting in some cases. The symbol will link to more information about how the ad was targeted, and allow users to click to opt out of targeting by participating publishers and ad networks.

The self-regulatory initiative “has been in pre beta development for quite some time,” said Leibowitz. To “naysayers” regarding the feasibility of the FTC’s new framework, Leibowitz asked, “What are you for? Because it can’t possibly be the privacy status quo.”

The FTC’s revised guidelines for behavioral advertising, released in 2009, called on websites to provide clear and prominent notice regarding behavioral advertising, and allow consumers to easily choose whether to have their data collected for ad targeting purposes. The new framework builds on the notice-and-choice model, stated the report; yet, “it aims to simplify how companies present such notice and choice and to reduce the degree to which privacy protection depends on them.” The report also added, “The notice-and-choice model, as implemented, has led to long, incomprehensible privacy policies that consumers typically do not read, let alone understand.”

The report also proposed that companies including data brokers give consumers “reasonable access to the data that companies maintain about them.”

The agency put forth the report in the hopes of influencing legislators and industry, and asked interested parties to submit comments regarding the proposals therein by January 31, 2011. A final report is expected later next year.

A House Commerce, Trade, and Consumer Protection hearing planned for tomorrow will also explore the possibilities of do-not-track. Entitled, “Do-Not-Track Legislation: Is Now the Right Time?” the hearing panel will feature FTC Director David Vladeck along with representatives of the U.S. Commerce Department and the tech industry. The subcommittee is home to pending comprehensive privacy legislation. Senator John Kerry (D-Mass.) has also indicated he would pursue privacy legislation.

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